energies
Article
Characterization of TSO and DSO Grid System Services and
TSO-DSO Basic Coordination Mechanisms in the Current
Decarbonization Context
Ricardo Silva * , Everton Alves






Citation: Silva, R.; Alves, E.; Ferreira,
R.; Villar, J.; Gouveia, C.
Characterization of TSO and DSO
Grid System Services and TSO-DSO
Basic Coordination Mechanisms in
the Current Decarbonization Context.
Energies 2021, 14, 4451. https://
doi.org/10.3390/en14154451
Academic Editors: Nicu Bizon,
Mihai Oproescu, Philippe Poure,
Rocío Pérez de Prado,
Abdessattar Abdelkefi and
Tomonobu Senjyu
Received: 27 May 2021
Accepted: 19 July 2021
Published: 23 July 2021
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Attribution (CC BY) license (https://
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4.0/).
Energies 2021, 14, 4451. https://doi.org/10.3390/en14154451
, Ricardo Ferreira, José Villar and Clara Gouveia
INESC TEC—Institute for Systems and Computer Engineering, Technology and Science,
4200-465 Porto, Portugal; everton.l.alves@inesctec.pt (E.A.); ricardo.j.ferreira@inesctec.pt (R.F.);
jose.villar@inesctec.pt (J.V.); clara.s.gouveia@inesctec.pt (C.G.)
* Correspondence: ricardo.emanuel@inesctec.pt; Tel.: +351-22-209-4230
Abstract: Power systems rely on ancillary services (ASs) to ensure system security and stability.
Until recently, only the conventional power generation resources connected to the transmission grids
were allowed to provide these ASs managed by the transmission system operators (TSOs), while
distribution system operators (DSOs) had a more passive role, focused on guaranteeing distribution
capacity to bring power to final consumers with enough quality. Now, with the decarbonization,
digitalization and decentralization processes of the electrical networks, the growing integration of
distributed energy resources (DERs) in distribution grids are displacing conventional generation
and increasing the complexity of distribution networks’ operation, requiring the implementation of
new active and coordinated management strategies between TSOs and DSOs. In this context, DERs
are becoming potential new sources of flexibility for both TSOs and DSOs in helping to manage the
power system. This paper proposes a systematic characterization of both traditional and potentially
new ASs for TSOs, and newly expected DSO local system services to support the new distribution
grid operation paradigm, reviewing, in addition, the main TSO-DSO coordination mechanisms.
Keywords: TSO grid services; DSO grid services; congestions management; voltage control;
distributed flexibility; TSO-DSO coordination
1. Introduction
Ancillary services (ASs) are grid services needed to support the transmission of electric
power from the generators to the consumers at the distribution grids, to guarantee the con-
tinuity, quality and security of the supply. ASs, traditionally provided by conventional gen-
eration power plants connected to the transmission grid, have been mainly directed to the
provision of system services to the transmission system operators (TSOs) for the operation
of the transmission grid. Some ASs are mandatory and not remunerated, with requirements
stipulated by network codes, while others are traded under market mechanisms.
The increase of non-dispatchable and less predictable distributed generation (DG)
and the progressive decrease of conventional dispatchable generation is making the bal-
ance between supply and demand harder to achieve, which emphasizes the relevance of
balancing ASs. At the same time, this is also transforming the distribution grids from
passive to active grids by accommodating many of the new power system resources and
increasing the operational complexity and responsibilities of distribution system operators
(DSOs) [1]. Indeed, deregulation, decentralization and decarbonization of power systems,
with the progressive closure of CO2 -emitting power plants (the traditional providers of
system services due to their high controllability), the increasing digitalization [2] and the
integration of distributed energy resources (DERs) [3,4], demands: (a) the introduction
of new system services to ensure the secure operation of an increasingly complex and
distributed electrical system [5] and (b) the need for designing the appropriate market
https://www.mdpi.com/journal/energies
Energies 2021, 14, 4451 2 of 30

mechanisms to incentivize optimal private investment for an efficient provision of the

services by integrating all kinds of resources [6].
As the presence of DER grows, so do the system needs for flexibility and system
services to guarantee the secure energy supply, as well as the efficient integration of all new
renewable energy sources (RES) into the system, including low-voltage (LV) resources at
the consumers’ level. However, DER can also become active players in local and wholesale
energy electricity markets, local and system-wide AS markets and capacity markets, with
the potential to promote the integration of distributed RES through the efficient and
coordinated management of the available resources. DER can offer their flexibility in
local and global markets, providing benefits to the distribution and transmission systems’
operation, while increasing the revenue streams for the asset owners [7]. As a result,
new actors and roles are entering in this new electricity market scene, such as aggregators
(AGGs), flexibility providers (FPs) and balance responsible parties (BRPs), among others [8].
Traditional grid services for TSOs are for example reviewed in [9]. The work in [10]
characterizes new DSO services, and makes an attempt to assess the amount of AS that
distributed resources could provide to both TSOs and DSOs. Integration of DER to provide
existing TSO ASs and investigation of new DSO local system services is also addressed
in [11], where market designs for DER integration are also discussed. The international
agency IRENA discuss [5] innovative TSO ASs and how DERs can be integrated as new
AS providers, while in [1] the new paradigm of distribution grid operation with new
market-base ASs to support the new roles of DSOs is addressed. Many research works and
conceptual and commercial initiatives have also been proposed in recent projects. Their
main objectives are improving DER integration as active FPs in local system services to
support the distribution grids’ operation, and, under TSO-DSO coordination schemes, con-
tributing to the transmission grid operation through the DER participation in system-wide
services. For example, EU-SysFlex [12] deals with the provision of TSO AS with distributed
resources and with TSO-DSO coordination issues. EUniversal [13,14] focus on DSO local
system services and market mechanisms, and seeks to develop a universal interface to ease
DER access to provide those services. Interconnect [15] has several tasks devoted to the
provision of flexibility services to DSOs and the development of interoperable interfaces to
smooth connectivity issues due to proprietary manufacturers standards. INTERRFACE [16]
also deals with connectivity issues among TSO-DSO consumers by characterizing flexibility
services and developing the corresponding interfaces, and OneNet [17] focuses on the
development of interfaces to improve the integration of all actors, flexibility markets and
platforms across Europe. Finally, ref. [8] provides an insightful revision of the best practices
and the main obstacles (regulatory, technical and economic) of the deployment of demand
side flexibility (DSF) on a national level in different European countries, with different
sizes, locations, generation mixes and legislations and operational principles.
Based on existing literature and on the work of the previously mentioned projects
(namely EU-SysFlex, Interconnect and EUniversal), this paper presents a characterization
of current and expected TSO and DSO flexibility needs in the current decarbonization
context, and the services that DER can provide to meet those needs. The main contributions
are: (a) a characterization of the current and expected TSO services considering the power
system evolution and expected scarcities; (b) a characterization of the potential future DSO
system services, with the identification of the main attributes to specify their technical
requirements and a DSOs’ practical assessment on the needs and services identified; (c) a
revision of the main TSO-DSO markets coordination mechanisms to integrate DER in
the provision of system services. One of the motivations for this work was the fact that
previous approaches did not provide such a formal, comprehensive and consistent review
and vision on both TSO and DSO grid services, with a special focus on DSO services and on
the flexibility markets structures for their acquisition. Indeed, these are concepts strongly
linked but that are very often scattered in many different works and addressed separately.
Therefore, this work fills an existing gap by providing a comprehensive reference for future
Energies 2021, 14, 4451 3 of 30

works that could help further research on new strategies for flexibility services design,
acquisition mechanisms and facilitating tools.
The structure of the paper is as follows. Section 2 describes the regulatory background
and defines the main system and market actors involved in the flexibility provision pro-
cesses. Section 3 describes the current and expected (due to the decarbonization path) TSO
needs and services, while Section 4 focuses on the analysis of DSO needs and potential
future services as one of the main topics addressed in this work. Section 5 reviews the main
basic TSO-DSO coordination mechanisms, and lastly, Section 6 presents the conclusions
and final remarks.

2. Flexibility Provision Context

2.1. Regulatory Background
In Europe, the use of flexibility from distribution networks was first established with
Regulation 2017/1485, which defines a guideline on electricity transmission system opera-
tion [18] and provides “rules and responsibilities for the coordination and data exchange
between TSOs, between TSOs and DSOs, and between TSOs or DSOs and SGUs (significant
grid users), in operational planning and in close to real-time operation.” In particular,
article 182 establishes the guidelines for the prequalification and delivery of active power
reserves by units or groups connected to the distribution system, which include service
delivery information, timelines and coordination with the reserve, connecting DSOs and
other possible intermediary DSOs.
More recently, in 2019, the European Commission proposed a new directive for the
electricity markets, Directive 2019/944, promoting the active participation of consumers
in the energy market, promoting electricity market competition and recognizing the role
of AGGs as intermediaries between customers and the wholesale market. The Electricity
Market Directive also defines the role of the DSO in the market and sets the requirements for
its independence. In particular, Article 32 (Incentives for the use of flexibility in distribution
networks) sets new requirements on the flexibility’s use in distribution networks [19]. The
required regulatory framework shall be provided by Member States in order to incentivize
DSOs to procure flexibility services in the areas under their supervision. All customers
should have access to electricity markets where they can trade their self-generated electricity
and potential flexibility. However, the flexibility procurement must be, on the one hand,
economically efficient, while on the other, it must not lead to market distortions or to the
increase of grid congestions. Therefore, Member States must present network development
plans for their distribution systems that account for the integration of RES installations, as
well as promote the development of energy storage facilities and the electrification of the
transport sector. Strategies such as demand response or energy efficiency and technologies
such as energy storage or any other resources that can defer or eliminate the need for
system expansions should also be included by the DSOs.

2.2. Main Actors

The necessary adaptation of market designs to allow DER participation requires
defining new roles either played by new actors, such as AGGs or BRPs, or by extending
the roles of parties that already exist, namely the TSOs and particularly the DSOs [8].
This section revises the roles of the actors related to system services and flexibility
provision, considering the main interactions represented in Figure 1. Actors usually refer
to real entities or parties (such as companies, market players, regulated entities and other
related stakeholders) that participate in a business model under study. Roles represent
the external intended behaviors of an actor. As such, actors can assume one or more
roles. In this sense DSOs, TSOs or suppliers are actors that carry out their activities by
performing roles [20]. While actors and roles are distinct concepts, they are sometimes
hard to differentiate. In addition, joining them allows sometimes to provide simpler and
closer-to-reality descriptions of existing or potential business models. For simplicity, the
Energies 2021, 14, 4451 4 of 30

Energies 2021, 14, x FOR PEER REVIEW 6

following definitions (based on the work carried out under the Interconnect Project [21])
are proposed and will be considered throughout the paper:

Figure 1.ofSchematic
Figure 1. Schematic of the between
the interaction interaction
thebetween the
different different
actors actors identified.
identified.

Transmission 3. Characterization
System Operator of(TSO)
TSO Needs
[20,22,23]andisServices
a “natural or legal person who is
responsible for operating, ensuring the maintenance
This chapter proposes a general characterization of and, if necessary, developing
of TSO needs and the the ser
transmission systemrequired in a togiven
meetarea and,and
current where applicable,
future needs, aits interconnections
topic with other discuss
that has been extensively
systems, and forliterature.
ensuring However,
the long-termevenability of the system
if the starting point oftothis
meet workreasonable demands
is an extensive literature re
for the transmission
of recent of electricity”
institutional(Directive
reports and (EU) 2019/944,
European Article
projects, 2, see value
its added definition
relies on the
(35)) [19]. Its main rolewhich
result, [23] isistonot
transport energyoffrom
the collection eachcentralized
individual sourceproducers visionto but
dispersed
a unified, consi
industrial consumers/prosumers
and more comprehensive approach of all the sources analyzed. precisely,
and DSOs over its high-voltage (HV) grid. More
the TSO is responsible for the reliable transmission of electricity from large-sized generation
plants to regional 3.1.orSystem
local electricity distribution
Needs, Scarcities, Servicessystems [24].Definitions
and Products The TSO must guarantee
the security of supply Asby ensuringinthat
proposed [13],the grid always
a flexibility needremains
can bestable
defined [18],as which entails
the requirement of a h
meeting the demand for transmission to maintain generation and consumption
level strategical action or set of actions for the better operation and/or planning levels of the
balanced to keeptothe system’s
enhance nominal
the security frequency
and quality between its nominal
of supply. This is limits,
coherentwhichwith
is based
the more spe
on non-local resources
proposal of [35], where system needs refer to ensure that the system [25].
such as inertia and automatic and manually activated reserves It
is operated wit
is also responsible for keeping voltages and power flows of its grid within
number of defined limits and that likely events can be properly managed. Specific n their operational
security limits, and
depend the sufficient
on the type active and(transmission
of grid reactive power vs. reserves
distribution)to withstand a set of in the
and are discussed
predefined contingencies [18]
sections of this paper. (Articles 18 and 33). To acquire the flexibility needed, EU
guideline [18] (Article 182, Section 2.1) already considers the possibility of the
A grid service is a specific strategy designed to satisfy one or several system n TSO making
use of distributed active
with a set power reserves requirements
of technical with the appropriate designed coordination
according to with DSOs
these (see that mu
needs
also the SmartNet projectand
defined [26]complied
or the ASM byTSO-DSO
the service Report [27] forFor
providers. TSO-DSO
example, coordination
automatic and ma
schemes, summarizedfrequency in Section 5). reserve (aFRR and mFRR, respectively) are different services fo
restoration
Distribution System Operator
frequency control need (DSO)
(see [2,28]
Table is 1).a “natural or legal person who is respon-
sible for operating, ensuring the maintenance of,
In a services market context, products and, if necessary,
are thedeveloping
tradable units the distribution
delivered by the FPs
system in a givenTSOs area,and andDSOs
wherecan applicable, its interconnections with other
procure for one or several services [13]. The complexity systems, and for of adap
ensuring the long-term
products to services can be left to the FPs side by developing aggregationofalgorithm
ability of the system to meet reasonable demands for the distribution
electricity” [19] (Directive (EU) 2019/944,
to the flexibility selectionArticle 2, seealgorithms,
or clearing definition (29)).if theyMoreare precisely, the
able to combine diff
DSO is responsible for thetooperation
products fulfill the (and sometimes
services technicalowner) of the electricity
requirements. distribution
Differentiating services from n
network, in some cases
(and even from HVproducts,
more grids throughsinceprimary
servicessubstations
are very often (HV/MV)
tied totothe theneed
finalthey add
consumers and allowsfor ensuring
to design theservices
agreed (and
power flow between
products) able todistribution
fulfill more than and transmis-
one need, and to r
sion grids operating
some level at LV,ofmedium-voltage
harmonization and/or (MV) standardization
and, in some cases, (one of HVthe distribution
main objectives of
Energies 2021, 14, 4451 5 of 30

networks [29]. The increasing integration of RESs and other DERs, such as distributed
energy storage and Electric Vehicles (EVs), has changed the distribution network paradigm,
with higher uncertainty and bidirectional power flows, imposing new challenges to ensure
an efficient and secure grid operation [30] and the injection of the distribution generation
surplus from the DG to the TSO grid. DSOs technical challenges are mostly local, such
as branch congestions, under- and over-voltages and network service restoration after
local outages by reconfiguring the network or, in the cases of longer interruptions, through
emergency generation groups. The local nature of distribution network problems requires
finding feasible solutions within an enclosed geographical area. To do so, DSOs need to
foster, as market facilitators, the participation of all types of potential market actors in a
non-discriminatory and transparent way [31] to unlock the flexibility available in their dis-
tribution grid for planning and operational purposes. Market-based flexibility acquisition
should be seen as preferential whenever it proves to be the most cost-efficient solution
–versus other solutions, such as mandatory flexibility provision or grid reinforcements) [19].
Balance Responsible Party (BRP) [32] is a market player or its chosen representative
responsible for actively balancing supply and demand for its portfolio (of producers,
suppliers, AGGs, prosumers, etc.).
Metering Data Operator (MDO) [20] (also metering responsible party or metering
data company) is and entity responsible for acquiring, storing and distributing validated
measured data. In this case, this is rather a role than an actor, very often performed by
TSOs for those assets connected to the transmission grid, or by DSOs for those connected
to the distribution grid.
Aggregator (AGG) (also flexibility provider, FP, or flexibility service provider) is a
third-party company that specializes on electricity demand-side participation by estab-
lishing, in practice, aggregator contracts with individual demand sites (i.e., industrial,
commercial or residential consumers) to aggregate their flexibility and operate it as a single
FP to TSOs, DSOs and BRPs [33] to maximize the value of that flexibility. Sometimes AGG
refers only to the role of aggregating and managing a portfolio of resources, while FP refers
to the role of interacting with the market to provide the flexibility managed by the AGGs.
AGGs can interact with the resources they aggregate through local monitoring and control
systems that can either control specific flexibility resources or through homes or building
integrated energy management systems (HEMS and BEMS, respectively) [34].
Supplier (SUP) (also retailer) is the entity responsible for buying electricity in the
wholesale market and selling and invoicing it to its customers. SUPs can also play the
roles of BRP or AGG. When the SUP is not the AGG of its own customers, then different
interaction models between them can be considered to account for the impact of the
flexibility provision on the SUPs forecast [23].
Forecast Provider (FCP) (also data service provider) is an entity that provides forecasts
of RES, generation and consumption based on different data (e.g., weather data and
historical load flow) to be used for grid analysis and flexibility availability computations,
as well as other data analytics services.
Figure 1 describes the main interactions among these actors around a generic flexibility
market. AGGs (or FPs) use HEMS and BEMS to determine and aggregate the available
flexibility to be offered to commercial or regulated flexibility markets. Typically, TSOs and
DSOs go to the regulated markets to procure the flexibility they need (see Section 5 on
TSO-DSO markets coordination), while BRPs go to commercial ones for balancing and
portfolio optimization purposes. The effective provision of flexibility is then verified by the
TSOs or the DSOs, depending on the procurer, based on comparing the FP commitments
with the metering data collected by the metering data operator. Finally, forecast providers
can provide, among other data, forecasts to help AGGs assess their available flexibility or
TSOs and DSOs to assess their upcoming flexibility needs.
Energies 2021, 14, 4451 6 of 30

3. Characterization of TSO Needs and Services

This chapter proposes a general characterization of TSO needs and the services re-
quired to meet current and future needs, a topic that has been extensively discussed in
literature. However, even if the starting point of this work is an extensive literature review
of recent institutional reports and European projects, its added value relies on the final
result, which is not the collection of each individual source vision but a unified, consistent
and more comprehensive approach of all the sources analyzed.

3.1. System Needs, Scarcities, Services and Products Definitions

As proposed in [13], a flexibility need can be defined as the requirement of a high-level
strategical action or set of actions for the better operation and/or planning of the grid to
enhance the security and quality of supply. This is coherent with the more specific proposal
of [35], where system needs refer to ensure that the system is operated within a number of
defined limits and that likely events can be properly managed. Specific needs depend on
the type of grid (transmission vs. distribution) and are discussed in the next sections of
this paper.
A grid service is a specific strategy designed to satisfy one or several system needs,
with a set of technical requirements designed according to these needs that must be defined
and complied by the service providers. For example, automatic and manual frequency
restoration reserve (aFRR and mFRR, respectively) are different services for the frequency
control need (see Table 1).
In a services market context, products are the tradable units delivered by the FPs that
TSOs and DSOs can procure for one or several services [13]. The complexity of adapting
products to services can be left to the FPs side by developing aggregation algorithms, or to
the flexibility selection or clearing algorithms, if they are able to combine different products
to fulfill the services technical requirements. Differentiating services from needs (and
even more products, since services are very often tied to the need they address) allows to
design services (and products) able to fulfill more than one need, and to reach some level of
harmonization and/or standardization (one of the main objectives of [17]). For example, at
the transmission level, including locational information to restoration-reserve-like products
could also allow us to use them for congestions management.
A scarcity is defined in [36] as a shortage of something that the power system has
traditionally had in good supply. For example, inertia is a commonly cited scarcity in
highly renewable systems due to the decrease of conventional synchronous generators.
System needs may require new services approaches due to forecasted scarcities that may
invalidate the way services were previously provided. For example, guaranteeing rotor
angle stability of remaining synchronous generators may require new services to guarantee
the required inertia in the system.

3.2. TSO System Needs and Services

The transition from power systems characterized by large synchronous generating
units towards systems with an increasing number of smaller, variable, non-dispatchable
and non-synchronous renewable generation units involves significant challenges for their
safe and reliable operation. As remarked in [12], these challenges are related with new
scarcities associated with the lack of frequency control, the lack of voltage control (VC),
rotor angle instability problems, network congestion and the degradation of the system
adequacy and restoration capability.
Energies 2021, 14, 4451
Need Comments
Non-synchronous, intermittent RES
is replacing synchronous generators.
Reduced amounts of synchronous
generation providing inertia and/or
Frequency Control
reserve capability leads to larger
and faster frequency oscillations
from its nominal value, making it
less controllable.
Less synchronous generation
available leads to:
• Reduced capacity to provide
reactive power support for
steady state and dynamic VC;
• Reduced short circuit power
Voltage Control
(limited capacity of converters
for injecting short-circuit
current);
furthermore, the connection of RES
in the distribution system leads to
voltage variation effects.
Table 1. TSO needs and current and future flexibility services.
Detection Event/Trigger
• Fault;
• Imbalance forecasted need;
• Imbalance forecast errors.
• Load and generation
forecasted need;
• Forecast errors;
• Fault.
Services
• Inertial response (immediate);
• Fast frequency response—FFR
(<2 s);
• Frequency Containment
Reserve—FCR (5 s to 30 s);
• Automatic Frequency Restoration
Reserve—aFRR (30 s to 15 min);
• Manual Frequency Restoration
Reserve—mFRR (30 s to 15 min);
• Replacement Reserve—RR
(15 mins to hours);
• Ramping (5 to 10 min).
• Steady-State VC (intraday (ID),
day-ahead (DA), long-term);
• Dynamic Reactive Power (<40 ms).
7 of 30
Service Objective
• Inertial response: minimize Rate of
Change of Frequency (RoCoF);
• Fast frequency response: decelerate time
to reach Nadir/Zenith;
• FCR: contain the system frequency after
the occurrence of an imbalance and limit
its oscillations;
• aFRR, mFRR: return frequency to
nominal value;
• RR: replace reserves used to provide
faster products; restore/support the
required level of FRR to be prepared for
potential further system imbalances.
• Ramping: oppose unforeseen sustained
divergences, such as unforecasted wind
or solar production changes.
• Steady-State VC: keep voltage within
limits during normal system operation;
• Dynamic Reactive Power: keep voltages
within limits and restore their values to
the normal range after grid disturbances.
Mitigate rotor angle instability.
Energies 2021, 14, 4451
Need Comments
Systems’ inertia and stability are
heavily affected by the displacement
of synchronous generation. A series
of problems related to small signal
stability and transient stability
arise, namely:
• Stability margins deteriorate
due to the reduction in
Rotor Angle Stability synchronizing torque;
• Transient stability margins are
reduced due to the
displacement of conventional
plants;
• New power oscillation modes
are introduced;
• Reduction of existing power
oscillations’ damping.
Transmission and distribution
connected RES can have periods of
increased feed-in power that may
cause transmission grid congestions.
Congestion
This leads to:
Management
• Reduced network hosting
capacity;
• RES curtailment.
The decrease in the number of
start-capable plants on the grid
has a significant impact on current
restoration strategies, since they
System Restoration
mainly rely on large synchronous
generation. A reformulation of
these strategies is of the
utmost importance.
Table 1. Cont.
Detection Event/Trigger
• Fault;
• Imbalance forecasted need;
• Forecast errors;
• Grid switching.
• Fault;
• Load and generation
forecasted need;
• Forecast errors.
• Planned maintenance;
• Unplanned fault
correction works.
Services
• Synchronous Inertial Response—SIR
(seconds);
• Fast Post Fault Active Power
Recovery—FPFAPR (<1 s);
• Dynamic reactive response—DRR
(<1 s).
• Corrective (real-time);
• Predictive (ID or DA).
• Black-start capability (within
minutes [5]).
8 of 30
Service Objective
• SIR: minimize RoCoF; if it can be
provided at low MW outputs, the
system will be able to accommodate
a higher level of non-synchronous
generation;
• FPFAPR: mitigate the impact of voltage
disturbances (including transmission
faults) on system frequency by
rewarding generators that can quickly
recover their MW output;
• DRR: mitigate the weakening of the
system’s synchronous torque, and,
therefore, its stability, by incentivizing a
reactive power throughput by wind
farms during disturbances.
Units redispatch to change the physical
flows in the transmission system and
relieve a physical congestion.
Combined with grid reconfiguration and load
restoration strategies, it provides the ability
to restart the network after a blackout,
guaranteeing grid stability by keeping active
and reactive powers within limits.
Energies 2021, 14, 4451
Need Comments
The high penetration of RES
generation may also spawn
adequacy problems:
• Load factors are reduced since
generation is closer to demand
and self-consumption is
expected to increase;
System Adequacy
• Conventional generation is
being decommissioned in
favor of RES with
low-capacity factors;
The interdependencies of
technologies are key issues to assess
load and capacity factors [37].
Table 1. Cont.
Detection Event/Trigger
• Grid planning
Services
• Last-resort tender (few years
in advance);
• Strategic reserves (reserved few
years in advance);
• Capacity mechanisms.
9 of 30
Service Objective
Energy markets with transmission planning
may not be enough to guarantee system
adequacy. Other mechanisms are:
• Last-resort tender: specific tenders to
build new capacity;
• Strategic reserves: contract pre-decided
capacity a few years in advance, which
cannot participate in the market and is
only activated in case of
capacity shortfalls;
• Capacity mechanisms (price-based,
volume-based or market-based):
payments assigned to the capacity
necessary to achieve a certain objective.
Energies 2021, 14, 4451 10 of 30

These scarcities have traditionally been tackled by a combination of grid operation

techniques (e.g., topology change), grid reinforcements and the operation of additional
equipment, such as capacitor banks, static synchronous compensators (STATCOM), static
var compensators (SVC) and synchronous condensers, as well as frequency regulation
reserves for balancing. The appointed changes on transmission grids require additional
support on their operation, which, if relying on the traditional resources, could delay
conventional generators’ decommissioning or require additional grid or equipment in-
vestments, with large expenses and reduction of environmental targets [9]. A window of
opportunity, therefore, opens for the provision of flexibility services by DER.
Table 1 summarizes the main current and expected TSO needs and associated flexibility
services adapted from the work performed at EU-Sysflex [12,36] and is complemented
with IRENA’s report on innovative AS [5]. It includes the fundamental TSO needs to be
addressed, as well a brief summary of the new issues concerning each need, leading to new
flexibility services.
TSO services are often divided into two major categories: (1) frequency AS and
(2) non-frequency AS [12,38]. The former category includes those services related with the
balancing of the system, while the latter generally encompasses, VC, CM or black-start
capability. The name of the service can vary from source to source. For example, frequency
control is often designated as frequency regulation, while VC is sometimes referred as
voltage support. Regarding the timeframe of fast frequency response, some initiatives have
been more stringent than indicated in Table 1. For example, by conducting an enhanced
frequency response tender, the National Grid in the United Kingdom contracted eight
battery storage facilities for a period of four years with the aim of providing sub-second
rapid response frequency reserves [5].
While ramping is sometimes associated with tertiary regulation (currently called
mFRR or replacement reserve, RR, see [39]), and involves scheduling generators to operate
within 1 to 8 h, in Table 1, it refers to the fast ramping capability. This is a new ancillary
service to address the net load volatility caused by the increase of variable renewable energy
generation, which is already being run, for example, by the California Independent System
Operator (CAISO). CAISO implemented Flexible Ramp Up and Flexible Ramp Down
Uncertainty Awards to procure the ramp up and ramp down capability for 15- and 5-min
time intervals [40]. Since then, similar products have been introduced by the Midcontinent
Independent System Operator (MISO), with 10-min intervals [41], or are being proposed
by the New York Independent System Operator (NYISO) [5].

4. Characterization of DSO Needs and Services

DER flexibility for the provision of local system services for the distribution network
is currently attracting considerable interest.
As was the case for TSO needs and services, this chapter also starts from an extensive
literature review of recent institutional reports and European projects. However, in this
case, DSO services are a still an underdeveloped topic, and a larger number of sources
was analyzed. Indeed, in [13], 24 European initiatives and pilot projects were studied
(see Table 2) in an attempt to characterize the distribution flexibility scarcities and needs,
the related flexibility services, the market mechanisms for its procurement and the main
tools needed to integrate this flexibility into DSOs planning and operation processes. A
survey among selected DSOs was also performed in [13] to validate and complement the
initial proposal. From [13], and with the involvement of several DSOs, such as E-REDES
(former EDPD from Portugal), E.ON. (Germany), Energa (Poland) and E.DSO (association
of 41 European Union DSOs), [14] proposes a further characterization of the main local
system services that DSOs could profit from to operate their grid.
Finally, with all the collected information from both reports, and the additional refer-
ences of this section, a classification, characterization and matching of needs and services is
here proposed, as consistent as possible with all individual approaches, summarized from
Tables 3–6, which, to our knowledge, is a relevant contribution to the state-of-art.
Energies 2021, 14, 4451 11 of 30

Table 2. List of projects and initiatives analyzed.

Date of Completion
Project Acronym Country(ies) Refs.
(or Expected)
ATLAS 2017 UK [42]
CoordiNet 2022 Spain [43]
De-Flex-Market 2015 Germany [44]
EcoGrid 2.0 2019 Denmark [45]
EMPOWER H2020 2018 Norway [46]
Enera 2020 Germany [47]
FLECH-iPower 2016 Denmark [48]
Flex-DLM 2018 Spain [49]
FlexHub Eu-SysFlex 2021 Ireland [50]
FLEXICIENCY 2019 Spain [51]
FlexMart 2016 Belgium [52]
Future Network Modelling Functions 2017 United Kingdom [53]
GOPACS-IDCONS Active platform The Netherlands [54]
InteGrid 2020 Portugal [55]
Interflex 2019 France [56]
INTERRFACE 2022 Luxembourg [57]
IREMEL Ongoing project Spain [58]
NODES Active platform Norway [59]
Open Networks 2020 United Kingdom [60]
Piclo Flex (and Piclo) Active platform United Kingdom [61]
PlatOne 2023 Germany [62]
Power Potential Ongoing project United Kingdom [63]
SENSIBLE 2018 Germany [64]
USEF Active organization The Netherlands [65]

4.1. Detailing the DSO Local System Needs

As already mentioned, the distribution network operation deals mainly with local
problems, so that feasible solutions must be found within an enclosed geographical area.
The more common issues are congestions, voltages and service restoration actions, which
are traditionally addressed through a combination of specific DSO equipment, grid re-
configurations and investments planning. Conventional CM and VC tools and DSOs’
assets have been designed for typical radial LV and MV networks, where power flows
are unidirectional. However, the increasing RES-based generation combined with meshed
distribution topologies requires a greater level of coordination. For LV networks, VC is
typically limited to the manual offline regulation of power transformers, which can be
particularly limited on longer power lines or when reverse power flows are established [66].
Furthermore, ensuring the N-1 criterion might not be viable considering, for example, the
difficulties in building new lines [18]. Therefore, DER flexibility can be exploited as an
alternative to the installation of additional equipment or grid reinforcements to overcome
the shortcomings listed above.
Table 3 summarizes the EUniversal research [13] by identifying the DSO needs more
frequently addressed across 24 recent initiatives and by DSOs themselves for tackling
such challenges, while Table 4 reviews in more detail these DSO needs and corresponding
flexibility services.

4.2. Flexibility Services for the DSO

Based on [13,14], Table 4 lists all needs and services identified, and summarizes their
general specification, and Table 5 describes the main attributes to characterize the technical
requirements of a service, which can serve as guidelines for the definition of the products to
deliver that service on a market environment. Following the template proposed at Table 5,
Table 6 collects the main specifications for the services identified.
Energies 2021, 14, 4451 12 of 30

Table 3. Number of initiatives addressing each identified DSO need.

Number of Projects Covering the Need

DSO Need
(of a Total of 25)
Congestion Management 21
Voltage Control 14
Support for Network Planning 10
Phase Balancing 8
Support for Extreme Events 7
Support for Planned/Unplanned Operations 7

Table 4. DSO needs and future flexibility services.

Need Comments Detection Event/Trigger Services Service Objective

Violation of the physical limitations of • Fault followed by an
the network (i.e., exceeding the assets outage and service • Operational CM
(real-time); Mitigate congestions to
thermal limits) caused, for example, by restoration;
Congestion • Short-term guarantee consumers supply
high power consumption during peak • Forecasted
Management planning CM and avoid grid
hours, use of heat pumps or congestion;
(ID or DA). equipment failures.
simultaneous charging of EVs or DGs • Load and generation
power generation during off-peak hours. forecast errors
Voltage magnitude outside admissible
Keep voltages within
limits with different consequences
specific safe bands and
depending on the duration and • Short-term restore their values to the
amplitude of the deviations (i.e., under- planning VC
• Load and generation normal range after grid
Voltage and over-voltages). Can be associated or (ID to DA);
forecast errors disturbances, to minimize
Control not to congestion, occurring typically • Operational VC reactive power flows,
during peak hours, concentrated (real-time). investments, technical
charging of EVs, use of heat pumps or
losses and, potentially,
DGs power generation during off-peak
RES curtailment.
hours, among others.
Voltage quality problem arising from the
unequal distribution of load and Improve the balance of loads
generation among the three phases of the • Short-term and generations among the
network. Affects mainly LV networks • Forecasted need; three phases of the network
planning VC
Voltage/Phase and can cause excessive heating and • Forecast errors; to reduce losses, increase the
(ID to DA);
Unbalances losses in three phase induction machines, • Unbalanced faults in distribution network
• Operational VC
excessive currents in three-phase power MV network. capacity, reduce the risk of
(real-time).
electronic devices, the reduction of failures and improve
feeders’ capacity and increased voltage profiles.
harmonic distortion.
Voltage sags (or dips) typically result
from faults occurring in transmission or
• Operational Provide automatic reactive
HV networks and can lead to the
based on local power compensation to help
malfunction and disconnection of • Voltage dips.
Voltage Sag VC functions compensate the voltage sag
different loads and or generators. More
(real-time). and avoid the disconnection
severe disturbances can compromise the
of loads and generation.
system’s stability and eventually cause
the collapse of the grid’s voltage level.
• Reduce the System
• Operational CM Average Interruption
(real-time); Duration Index
Using flexibility as an alternative to • Short-term (SAIDI) and Energy
Support for disconnecting costumers, power cutting • Planned planning CM Not Supplied (ENS);
Planned and or using fuel generators when faced with maintenances (ID or DA); • Reduce the usage of
Unplanned planned or unplanned maintenances (the followed by field • Islanding; fuel generators;
Maintenance last case resulting from outages where it work to restore • Voltage and • Increase the periods
Action is not possible to temporarily restore service frequency where it is possible to
service to all consumers). control; perform network
• Black-start maintenance actions
capability). without deteriorating
the quality of service
Energies 2021, 14, 4451 13 of 30

Table 4. Cont.

Need Comments Detection Event/Trigger Services Service Objective

Using flexibility to postpone network Use flexibility in
investments to solve either current or • Long-term VC combination with grid
forecasted physical congestions related combined with investments to solve
Support for • Forecasted need; long-term CM
to reduced network capacity (overload or forecasted physical
Network • Risk assessment. (months to years
voltage violation) and improve network congestions related to
Planning ahead);
reliability in cases where building new reduced network capacity
lines are not desirable (e.g., nature • Islanding. (overload or
conservation areas). voltage violation).
• Increase grid resiliency
for minimizing the
impact of extreme
weather events;
• Islanding: improve
• Islanding; continuity of supply in
• Black-start case of unavailability
DSO need related to an increase in the capability; of the main grid;
resilience of distribution networks • Emergency load • Black-start: provide
Support for and/or capacity to quickly recover from • Failures due to the ability to restore
control;
Extreme extreme events. Such events often lead to extreme and natural service locally after
• Interruptible load;
Events equipment damage, with consequences disasters. a blackout;
• DER;
ranging from congestion and voltage • Backup • Emergency load
problems to grid islanding scenarios. generation control: provide load
capacity. reductions that lessens
stress on the grid;
• Backup generation
capacity: make
sustainable power
available for islanded
operations.

Table 5. Attributes for the characterization of a grid service.

Parameter Description
Moment when the service is contracted.
Procurement timeframe (a) Operational (real-time);
(b) Short-term planning (D-1 to M-1);
(c) Long-term planning (>M-1 to Y-1, or more).
Reservation and/or activation If procurement requires reservation in advance (e.g., D-1) or activation in real-time or both.
Activation of flexibility can either be manual, at the request of the operator or automatic, in case of
Mode of activation
local control strategies.
Estimation of the time required to solve the technical problem, which is necessary to evaluate the
Expected duration of the response
capability of the DER to provide a requested service.
Period comprehended between activation and full delivery of the service; encompasses seconds,
Full activation time
minutes or hours depending on the resource.
Identifies if the response must be provided by node or for a wider scope; from local (LV) to regional
Geographic scope (MV) and cross-regional (HV), can also be defined per point of common coupling (PCC), feeder or
substation; relevant for understanding if and how resources can be aggregated.
Participation of the mobilized flexibility can be mandatory (in which case, non-delivery is met by
Mandatory status penalties) or procured on the market (in which case, DER can be remunerated according
to participation).
If the service allows the aggregation of resources as a way of meeting minimum quantities at a
Aggregation
specific location.
Minimum quantity Minimum power that can be provided per offer; usually in the order of magnitude from kW to MW.
Maximum quantity Maximum power that can be provided per offer; usually in the order of magnitude from kW to MW.
Represents the estimated time for a resource to stop delivering a service upon receiving a
Deactivation period
deactivation signal; usually in the order of magnitude from seconds to minutes.
Minimum duration of the service provision (coincides with the step for product definition, when
Minimum duration of delivery period
services are defined in steps of equal time length); a typical value encountered is 15 min.
Maximum duration of delivery period Maximum duration of the service provision; usually in hours.
Energies 2021, 14, 4451 14 of 30

Table 6. Basic specifications of each identified service [14].

Services Providing Services For Support For Planned/Unplanned Operation

Services Addressing CM Services for VC and PB
Support for (Including Extreme Events)
Operational CM Short-Term Planning CM Operational VC Short-Term Planning VC Network Planning Mobile Generation Capacity Black-Start Islanding
Procurement timeframe Real-time Daily or ID Close to real-time Daily, ID or DA 1–3 years Short-term, considering planned or forecasted events
Reservation and/or 1 Activated when 1
Activation Both are possible Both are possible Reservation Reservation 3
activation needed 2
Mode of activation Manual Manual 4 or automatic 5 Manual Manual Manual and automatic 6
Expected duration of Restricted by thermal limits and activation time of MV: from minutes up to 1 h;
NA Variable 8 No more than 1–3 h
the response the resource LV: from 15 min up to 3 h 7
From seconds to some minutes, aligned with Aligned with the provider constraints that, by Immediately after the
From seconds to some
Full activation time thermal limits and dependent on the power From seconds to some minutes stating the timeframes, establishes a parameter switch opens and the
minutes
ramping of the resource for selection “island” is formed
Geographic scope Local 9 , regional or cross-regional Local 10 Local 11 Local 10 Local 12 Local 13
Non-mandatory
Mandatory or procured (procured on market or Mandatory or not,
Mandatory status Mandatory Mandatory Non-mandatory
on market provided through depending on the risk
redispatch)
Considered, even at Considered for
Subject to restrictions May be limited by market
Considered when voltage levels different resources of equal
Aggregation since this is a and technical NA
limited to a PCC 14 than the one for which the and/or lower
fast-response service requirements
problem occurs 15 voltage levels
Established to secure the adequate voltage
Minimum quantity Limited by the power electronics equipment and/or measurement error
and frequency regulation
Maximum quantity Limited by the installed capacity
Dependent on the Dependent on the
Dependent on the power Less than 1 min after the reconnection to the
Deactivation period power ramping of 15 min power ramping of 15 min NA
ramping of the resource main grid
the resource the resource
Minimum duration of
15 min Several hours 30 min >30 min 15 min
delivery period
Maximum duration of Limited by the installed energy capacity of
No limit
delivery period the provider
1 Based on the service’s requirements and the resource’s availability. 2 Activated when needed (directly to service provider for the next 15 min). 3 Possibility to reserve availability from microgrids/grid forming
storage and storage mobile units or units with islanding and black-start capabilities. 4 Changing the inverters VA/var setpoint. 5 Through a fixed voltage set point or fixed curve in inverters. 6 Manual in the case
of remote controlled by DSO or FPs, automatic in the case of local inverter functions (e.g., droop curves, LVRT, etc.). 7 For example, coinciding with the peak of PV generation. 8 Considering the size and
capacity of the system. 9 Locally, CM can solve problems on feeders, transformers or PCC, while it can also be considered for whole LV grids, overlaying MV feeders and even at HV level. 10 Substation, feeder,
transformer or PCC. 11 Substation, feeder, transformer or PCC, of equal and/or lower voltage level. 12 At MV/LV substations. 13 Formed at HV/MV or MV/LV substations or at sections of an MV feeder.
14 Temporal constraints at operational timeframe do not allow for a complex analysis of the impact of flexibility provided by DER at other points of the LV grid. 15 When this is the case, it cannot be considered as

the simple capacity summation of the aggregated resources.

Energies 2021, 14, 4451 15 of 30

4.2.1. Services Addressing Congestions Management

CM represents the need to mitigate/avoid physical congestions, a condition defined
by Commission Regulation (EU) 2015/1222 [67] as “any network situation where forecasted or
realised power flows violate the thermal limits of the elements of the grid and voltage stability or the
angle stability limits of the power system”.
In practice, such limitations can be caused by high power consumption during peak
hours, use of heat pumps, simultaneous charging of EVs or excessive power generation
from DGs, among others.
The ubiquitous response for current-related issues relies on active power management,
regardless of the geographic scope, time frame or event/trigger. A direct correlation can,
however, be established between the events/triggers that originate the need for CM and the
time frame where they take place. Faults such as short-circuits can cause congestion in the
feeders that remain connected, or during the restoration of service, requiring an automatic
and fast response, whereas the operational forecasting of (possible) congestions usually
takes place on an intraday to day(s)-ahead timescale. Going even further, congestions
can also be forecasted during network planning and maintenance scheduling, which are
planned months to years ahead [4], where CM could help to defer and/or avoid grid
reinforcements [2].
Services for CM are then viewed by DSOs as both planning and operation tools.
Indeed, CEER’s report [2] states that “DSO congestion management can take place long
before, prior to, during or after existing wholesale market clearing and as far as just before
the (gate) closure of the balancing market”. In addition, the increasing penetration of DER
and the gradual uptake of the markets driven by the system needs will likely increase the
availability of flexibility for CM purposes, and support short-term liquidity and a higher
procurement for services closer to real-time [12]. Although [12] only addresses AS for
TSO, this will be also applicable to DSO thanks to mechanisms such as the aggregation of
small-scale DERs.
Three CM services are derived in this paper, differing mainly on the procurement
timeframe, namely: Operational CM, Short-Term Planning CM and Long-term CM.
Operational CM (sometimes called corrective CM as in [14]) is associated to congestion
problems detected in real-time, which are often linked to forecast errors or equipment
failures and requires (near) real-time control action of flexible resources.
Implementing a market-based operational CM service would be viable if the reserve
capacity is negotiated before the related problems arise, or if the fault correction can be
delayed until the flexibility is acquired. Otherwise, operational CM must rely on mandatory
regulated mechanisms to allow very fast activations of the available flexibility. However,
considering the uncertainty associated to network contingencies, the computation of the
necessary reserve capacity would require the adoption of network planning tools capable
of dealing with uncertainty and risk. Additionally, adequate products need to be defined
for these timeframe (e.g., considering only activation price with activation limits defined).
Short-Term Planning CM goes from day-ahead (DA) or intraday (ID) to month-ahead
(the later mainly for maintenance planned purposes), and is based on the analysis of
demand and generation forecast scenarios that may anticipate congestion problems. In this
case, all terms (DA, ID and month-ahead), basically share the same tools and strategies.
For these timeframes, the DSO can address the CM need with a combination of flexibility
acquisition and grid reconfigurations.
Long-term planning was considered in this paper as a specific service and is discussed
in Section 4.2.4.

4.2.2. Services for Voltage Control

VC aims at keeping voltages within acceptable voltage limits, according to Standard
EN50160 [68]. Adequate voltage regulation in distribution network is critical to restore
voltages values to their normal range after grid disturbances given its strong influence on
Energies 2021, 14, 4451 16 of 30

grid performance and on several types of loads, particularly on electronic loads, inverter-
based DER and induction machines.
As presented in Table 4, and following Standard EN50160 [68], three voltage quality
problems were identified that could potentially be solved with flexibility resources, namely:
under and overvoltage problems, voltage unbalances and voltage sags.
Voltage regulation in distribution networks has been mainly performed through the
control of OLTC at the HV/LV substations, with the objective of compensating the voltage
along the radial feeders. However, this control principle can become ineffective in MV
and LV networks integrating high shares of RES, where reverse power flows can occur,
causing the voltage to increase in the end of the feeders [66]. This problem is accentuated
in LV networks, due to the low reactance-over-resistance (X/R) ratio of the cables. LV
networks are also three-phase four wire networks where the loads and DER are mostly
single-phase and unevenly connected to the three phases, consequently causing voltage
unbalance problems that cannot be solve at the HV/MV substation.
Increasing voltage regulation and balancing capabilities in MV and LV networks
through DER control has been foreseen in several countries that have DER grid connection
requirements [69]. This implies either the remote control of DER by the DSO or local
DER inverter functions, usually referred to as dynamic VC. However, these local control
functions do not allow the DSO to forecast the network behavior in predictive management,
and in scenarios of high integration of RES, this can lead to unwanted oscillatory voltage
behavior [70]. In this sense, coordinated VC has been proposed in the literature in addition
to these local control strategies [71].
Voltage sags are considered power quality disturbances, defined in EN 50160 [68] as
a “sudden reduction of the supply voltage to a value between 90% and 1% of the declared voltage
Uc (reference voltage) followed by a voltage recovery after a short period of time ( . . . ) between
10 ms and 1 min”. These can occur in both MV and LV networks, as previously described,
originating from faults occurring at the transmission level. Larger disturbances can be
further caused by the disconnection of large shares of DER generation. DER connected
at MV and LV should, therefore, be endowed with Low Voltage Ride Through (LVRT)
capabilities, which may help mitigate the effects of these larger disturbances [69,72].
VC is considered for the LV and MV networks and can be tackled by active and
reactive power management (AP-M and RP-M). Solutions for all timeframes are considered
interesting, depending, as for CM, on the event/trigger of the need for VC. With the excep-
tion of voltage sags that can result from faults requiring real-time response to compensate
the voltage dip, voltage magnitude and unbalance compensation are triggered mainly by
the forecasted status of the MV and LV network for the next day or hours and consequent
errors detected in (near) real-time. Therefore, as for CM, VC services can be classified by
their timeframe into Operational VC and Short-Term Planning VC.
Operational VC consists of the capability of regulating voltage in (near) real-time, ei-
ther through remote control of DER active and/or reactive power or dynamic VC schemes.
It is particularly directed for localized problems, requiring a quick response of the avail-
able flexibilities.
Short-Term Planning VC is designed for forecasted disturbances, again from DA or ID
to month-ahead timeframes. For example, a forecastable problem that occurs cyclically and
repeats at specific times (such as PV production in summer on a high insolation location)
would be best tackled by the frequent acquisition of a service that extends over long periods
of time.
The planning horizon and the voltage level of the network are key factors in the
definition of VC services. Both of them, although sharing general technical assumptions
across different timeframes, can be substantially different depending on the voltage level.
First, the geographical scope of the services will generally be limited, since VC needs
are localized in nature. Nonetheless, VC problems may also span across several voltage
levels. Both the amount of power and the duration of the service can, for example, vary
significantly when considering LV lines (which are more resistive, and therefore, more
Energies 2021, 14, 4451 17 of 30

suited for AP-M) or MV/HV lines (which are more inductive, and therefore, more suited
for RP-M).
In addition to voltage regulation, reactive power management in the distribution
network also has the objective of meeting the limitation of reactive power import/export
with the transmission network, following ENTSO-E recommendations [68]. Reactive power
regulation will even become more urgent in high RES integration scenarios, where a large
share will be connected to the distribution network.

4.2.3. Services for Phase Balancing

As described previously, voltage unbalances are considered a voltage quality problem
leading to an inadequate operation of loads and increased losses. In the MV network,
voltage unbalance typically results from unbalanced faults causing unbalanced voltage in
the MV/LV substation. The problem is more common in LV networks, due to the uneven
connection of single-phase loads and generation between the three-phases of the network.
This problem is expected to take increased proportions in the future due to the widespread
of EV charging, microgeneration and the increasing adoption of self-consumption profiles
by prosumers.
DSOs traditionally tackle this problem by reconfiguring the LV network and redis-
tributing LV consumers/prosumers between phases. However, this can represent a sig-
nificant amount of field work that may imply service interruptions. In this sense, the
control of single-phase DER is an opportunity to increase the capability of managing the
power flow in each phase. Both single-phase and three-phase DER can help compensate
voltage unbalance through AP-M or RP-M strategies, implemented either by remote active
and/or reactive control or locally (in the case of three-phase DER), adopting specific voltage
unbalance compensation strategies.
The three types of VC are adequate to help solve voltage unbalance problems, which
should be tackled together with VC. In fact, maintaining voltages within acceptable limits
will also help to minimize voltage unbalance problems.

4.2.4. Support for Network Planning

Network planning aims at identifying the most efficient solution (or set of solutions,
depending on the adopted planning criteria), regarding the expansion or the reinforcement
of an existing distribution grid. Before the advent of DER, the conventional planning
paradigm aimed primarily at accommodating the foreseen increase in electricity consump-
tion within a certain time horizon, e.g., 10 years. This was achieved by identifying the
investments (new lines, new transformers, new substations, etc.) that were required to
meet the electricity demand, as well as their associated cost.
In recent years, however, planning the network’s expansion has become an increas-
ingly difficult endeavor to DSOs, as the growing integration of DER, especially volatile
renewable generation, is causing the network’s equivalent net load (generation minus the
load) to become ever more unpredictable. At the same time, environmental restrictions are
limiting the number of possibilities for placing new lines and substations, as new legislation
tends to penalize investments that involve building infrastructures outside the already
existing distribution network. In this setting, flexibility can be particularly beneficial to
the network, as it can contribute to alleviate or even eliminate some of the issues that
lead to the reinforcement needs. For example, the availability of storage devices in the
network can help to absorb the excess of renewable generation at critical times, reducing
the number of overvoltages and branch congestions throughout the planning horizon.
Similarly, controllable loads can be transferred from peak hours to other periods of the day,
which can limit the occurrence of undervoltages throughout the planning horizon.
Flexibility should, then, be explicitly included during the network planning as an
alternative to grid investments to determine the most cost-effective solutions, especially to
solve occasional constraints. Network planning usually considers congestions and voltages
issues together, not being addressed independently, so no differentiation between CM and
Energies 2021, 14, 4451 18 of 30

VC long-term planning is usually needed. The timeframe is usually 1 to 3 years, enough to

allow for grid investments. For this service, flexibility should be previously reserved, but
only activated if the predicted grid constraints are still expected based on the most recent
grid analysis, close to real-time. This flexibility could be mandatory when large potential
risks and consequences are expected in the grid operation.

4.2.5. Services to Support Planned/Unplanned Operation (Including Extreme Events)

Flexibility can be used as a mean to avoid the disconnection of costumers (for exam-
ple through operational CM and VC) or, when an outage occurs, following planned or
unplanned events, can help minimize the energy not supplied (ENS) and the time of inter-
ruption, either by supporting network reconfiguration or by enabling islanded operation,
minimizing the use of fuel generators. This would also help increasing networks’ resilience
against natural disasters and extreme weather, increasing the mechanism to prevent, miti-
gate and recover the system [73]. Services addressing this need would ultimately prevent
supply interruption in parts of the grid, reduce the duration and frequency of outages and
reinforce the resilience of areas where power supply is critical.
Planned and unplanned operations can then be supported by CM and VC described
previously, supporting for example network reconfiguration actions required both in
planned and unplanned actions. When no network reconfiguration alternatives are avail-
able, services such as islanding, black-start, emergency load control and mobile genera-
tion capacity will help improving the network reliability and resilience against extreme
weather events.
The islanding service consists of providing power supply to all or part of the clients
that are affected by a service interruption, through the establishment of a small microgrid
(or island) endowed with the adequate control functionalities to operate it. However,
islanding has technical complexities and costs that could be larger than the N-1 (or even
reinforced) grid planning criterion. These technical challenges include [14,74]:
• Frequency and voltage regulation capability, provided by one or more grid forming
units capable of establishing the grid voltage in magnitude and phase of the islanded
grid (microgrid) and providing fast frequency and voltage regulation.
• Synthetic inertia, provided also by the grid forming unit(s) or by other DER with
specific inertia emulation functionalities, exploiting the controllability of DER and
their power electronic power inverters [74].
• Frequency support, so that DER can locally change the power outputs as a func-
tion of the microgrid frequency to maintain the local power balance (e.g., active
power/frequency drop characteristics).
• Voltage support, so that DER can change the power outputs as a function of the
microgrid voltage (e.g., active or reactive power/voltage drop characteristics).
• The existence of sufficient production and flexibility (which could also come from
the demand side) to keep the instantaneous energy balance of the microgrid by also
providing load and generation reserve capacities. Load imbalances can, for example,
be met by fast responsive storage devices operating in flawless coordination with local
generation and flexible loads.
Based on the above points, the islanding service can be viewed as consisting of a set
of complimentary services, some of them overlapping with other CM and VC services
already discussed, to be provided by DER. Further considerations need to be established
when considering islanded areas where multiple DSOs are operating, and where assets
within the island are either providing flexibility services to TSOs or pre-contracted market
services. The islanding service becomes more relevant for locations where compliance
with the N-1 criterium is challenging due to the impossibility of constructing new lines
or interconnections.
Black-start is a service for addressing partial or total blackouts in sections of the main
grid, as a consequence of extreme events for example, and is complementary to the above
islanding services to reestablish power in a local microgrid affected by a previous outage.
Energies 2021, 14, 4451 19 of 30

The resources to provide such a service are not very different from the ones considered
for islanding, and include local generation and storage units, either stationary or mobile.
DER should also have black-start capability, and fast frequency and voltage services to
operate in islanded mode [75]. To ensure the stability and balance of the recently restored
system, adequate communication channels between DSOs and all parties involved is
also fundamental.
Emergency load control may be needed for additional load shedding when other
solutions (market based) cannot provide the required amount to maintain stability and
prevent further problems, while avoiding generation curtailment. A social merit order
should guide the selection of the loads to be curtailed, so that, for example, hospitals, police
stations and firefighter’s headquarters are usually the last in that merit order. Regulatory
mandates are preferred to market mechanisms by DSOs (the latter of which should have
already been depleted before), since it is an emergency service, with manual activation to
ensure that priority loads are not interrupted.
Finally, islanding and black-start services could be provided by mobile generation
capacity, which, similarly to diesel emergency generation, provide an alternative and
temporary power to supply to consumers connected to a certain grid area or to avoid
under-voltages and stability problems caused by planned or unplanned operation or
extreme events. This service can be market-based and could rely on long-term bilateral
agreements between DSOs and FPs.

4.3. Challenges for Upscaling the Integration of Flexibility in Distribution Networks: DSO
Vision Insights
Taking advantage of the flexibility of DER for improving distribution network ef-
ficiency, reliability and resilience is widely recognized by DSOs. However, three main
barriers have been identified for promoting market-based flexibility mechanisms at the
distribution level, namely: regulatory, network observability and deployment of DER
control and management systems [13].
Although Directive 2019/944 for electricity markets incentivize DSOs to procure
flexibility services, current national regulatory frameworks are distinct in the different
countries. Indeed, as reported in [8], national regulations often restrict the offering of
certain services or the participation of some FPs, as in the UK, where policy and regulatory
barriers are hindering the participation of smart solutions such as DR. However, in other
cases (see also [8]), these services cannot be financed, or the technology has not yet been
fully researched and assessed to provide these services, as is the case in Greece, where
the digitalization of the national networks is still in the preliminary rollout phase, namely
the installation of digital, smart metering devices. Oftentimes, the case is that no specific
regulation has yet been adopted for the use of flexibility in the distribution network.
Regarding the list of needs, the survey conducted by EDSO in [13] identified VC as
the more relevant need, followed by CM. This was an interesting result, considering CM
was the most addressed service in the projects analyzed (see Table 3). This can be explained
by the concerns towards the growing integration of DER and EV in LV networks, causing
mainly voltage magnitude and unbalanced phase problems associated to the specific
characteristics of these networks (e.g., radial topology and three-phase four wire network
with single-phase DER and loads connected) in a network with reduced monitoring and
control capabilities.
For VC and CM, both RP-M and AP-M are already addressed by most DSOs, partic-
ularly considering mandatory schemes. Implementing market-based flexibility services
implies a change in distribution network monitoring and control strategies towards a more
predictive approach. A predictive network management strategy will enable the forecast
of technical restrictions (e.g., voltage and congestions problems) and to define the optimal
operation strategy considering both network assets and flexibility resources [76].
Currently, the main Advanced Distribution Management Systems (ADMS) are moving
towards this predictive management strategy, particularly for HV and MV networks,
incorporating load and generation forecast tools and adapting traditional power system
Energies 2021, 14, 4451 20 of 30

simulation tools, such as optimal power flow [64]. The main challenge remains to develop
an adequate network management framework for the LV networks, considering the low
observability due to reduced monitoring capabilities and the high error of LV load forecasts.
Specific tools need to be developed, taking advantage of smart metering infrastructure and
its historical data and capable of dealing with poor topology mapping and network feeder
electrical parameter characterization [55,64,76].
Similarly, current network planning methodologies follow a business-as-usual model
considering conventional network reinforcement investments. To plan and assess the
benefit of long-term flexibility products, flexibility must be integrated as an additional
asset for planning purposes [64,77].
Therefore, implementing CM and VC through market-based mechanisms for short-
term and long-term planning requires significant updates in DSO systems and might
represent a costly solution to implement in the next 5 years for some DSOs [13]. The
potential value of services for support planned and unplanned actions are still considered
residual by DSOs, particularly islanding and black-start services. Islanding operation
in most countries is not allowed, also requiring wider implementation of network’s au-
tomatic switching equipment and complex network protection systems with adaptive
capabilities [78]. However, growing integration of RES and network resilience concerns
are increasing the interest on the possibility of islanding operation and distributed service
restoration, where tackling resilience becomes a more relevant operation and planning
criterion [79,80].
The early-stage development of local flexibility markets can also be explained by the
reduced number of FPs. The deployment of self-consumption solutions, EVs and other
flexible loads supported by interoperable energy management solutions will help scale up
flexibility in distribution networks, increasing the liquidity of local flexibility markets [15].
In conclusion, upscaling market-based flexibility services in distribution networks
requires: (1) the development of adequate national regulation framework; (2) increas-
ing the distribution networks observability and moving towards the predictive network
management framework, including adequate tools for LV networks; (3) promoting the de-
ployment of interoperable energy management solutions for increasing the remote-control
capabilities of flexible resources.

5. Basic TSO-DSO Coordination Mechanisms

The revision work in [13], on the projects and initiatives that led to the characterization
of DSO needs and services, was also the basis for the identification of the main market
mechanisms used to acquire these services. To do so, based on existing literature on
TSO-DSO markets organization, but complemented with the experience gained from
this analysis, the main TSO-DSO market mechanisms are revisited and described from
a functional point of view, and the main options selected to acquire the services are also
identified in Table 7. A critical discussion of these results is also provided based on the
market organizations complexities, data sharing and level of development of such markets,
as well as a comparison with similar initiatives in the USA and Australia.
The use of distributed flexibility from both TSO and DSO is a challenging problem that
requires improving the existing coordination mechanisms among them. When flexibility
services are market-based, it is common to simplify TSO-DSO coordination mechanisms
into several schemes that help to characterize and understand their main features and
differences. Building from existing literature (see for example [13,27,81,82] or more re-
cently [83]), we suggest (based on the work carried out under the Interconnect Project [21])
a further simplification of the main market-based coordination mechanisms by focusing on
the three more common approaches.
• TSO centralized flexibility market (M1)
# This approach is closer to the current situation (see Figure 2, model M1), where
the flexibility is only procured by the TSO in its own centralized market(s),
where aggregated DER are also allowed to participate under certain conditions.
 or more recently [83]), we suggest (based on the work carried out under the Interconnect
Project [21]) a further simplification of the main market-based coordination mechanisms
by focusing on the three more common approaches.
• TSO centralized flexibility market (M1)
Energies 2021, 14, 4451 21 of 30
o This approach is closer to the current situation (see Figure 2, model M1), where
the flexibility is only procured by the TSO in its own centralized market(s), where
aggregated DER are also allowed to participate under certain conditions.
#
o AApre-qualification
pre-qualificationprocess
processofofthe
theDER
DER cancan take place
place to
to guarantee
guaranteethat
thattheir
their
activation does not compromise the DSO’s grid, possibly followed
activation does not compromise the DSO’s grid, possibly followed by a close to by a close
to real-time
real-time DSODSO validation
validation before
before theflexibility
the flexibilityactivation,
activation, to
to guarantee
guaranteethethe
distribution grid’s safe operation.
distribution grid’s safe operation.

bids
Market agent

Prosumer,
DER
Aggregator bids DSO+TSO bids TSO
(market agent) Pre-qualification AS market(s)
Prosumer,
DER TSO/DSO resources
selection

TSO

DSO validation
Activation/scheduling for local use
Measurement for verification

Figure 2. Centralized TSO flexibility market (M1).

Figure 2. Centralized TSO flexibility market (M1).
• Local (DSO) and global (TSO) flexibility markets
• Local (DSO) and global (TSO) flexibility markets
# In this approach, the flexibility offered by the DER is managed in a local DSO
o Inflexibility
this approach,
market, thewhile
flexibility
TSO has offered
its own by flexibility
the DER is managed in a local DSO
market(s).
# flexibility market, while TSO has its own flexibility market(s).
The DSO uses the local resources for its own flexibility needs, and the remaining
o The DSO uses
flexibility the local
is made resources
available forTSO,
to the its own
withflexibility
two possibleneeds, and the
sharing remaining
mechanisms:
flexibility is made available to the TSO, with two possible sharing mechanisms:
(a) The TSO has direct access to the DER bids (Figure 3, model M2), so
(a) The TSO has directthat itaccess to the DER
can directly bids
select (Figure
those bids3,that
model M2),
solve itsso that itincan
needs thedirectly
most
Energies 2021, 14, x FOR PEER REVIEW 21 of 29
select those bids that solve
efficient its needs
way. With this in the mostthe
approach, efficient
DSO may way.want
Withtothis approach,
validate the
the DSO maybids wantselected
to validate
by thetheTSO
bids before
selected by the
their TSO before
activation their activation
to guarantee its ownto
guarantee its grid
own safe
gridoperation.
safe operation.
(b) As an(b) alternative,
As an the
Coordination TSOmay
alternative, cantheagree
TSO with
sometimes the DSO
include
can agree withthe(Figure
the DSO 4, model
communication
(Figure M3)
from
4, model onM3)
theDSO
the
desired flexibility
toonthe atTSO
the the TSO-DSO
desired connection
of flexibility points, and
at theactivated
the flexibility TSO-DSO the DSO
connection
locally manages its local
points,potential
to avoid and the TSO
market for its own
DSO
imbalances.purposes,
manages However, but also
its local market
in manyto satisfy,
for where
its own
cases, possible,
purposes,
locally butthe
activated also TSO needs
to satisfy,
flexibilities have a
according toverythe agreed
where flexibility
possible, the profile.
TSO needs according
low significant impact on TSO balancing. to the agreed flexibility profile.

bids
Market agent

Prosumer,
DER
Aggregator bids DSO+TSO DSO local TSO
(market agent) Pre-qualification flexibility market AS market(s)
Prosumer,
DER
DSO resources TSO/DSO resources
selection selection

Activation/scheduling for local use

DSO TSO
Measurement for verification

Activation/scheduling for global use

DSO validation
Measurement for verification

Figure3.3.Local
Figure Local(DSO)
(DSO) and
and global
global (TSO)
(TSO) flexibility
flexibility markets
markets withwith resources
resources sharing
sharing (M2). (M2).

bids
Market agent

Prosumer,
DER
Aggregator DSO+TSO bids DSO local TSO
(market agent) Pre-qualification flexibility market AS market(s)
 Activation/scheduling for local use
DSO TSO
Measurement for verification

Activation/scheduling for global use

DSO validation
Measurement for verification
Energies 2021, 14, 4451 22 of 30

Figure 3. Local (DSO) and global (TSO) flexibility markets with resources sharing (M2).

bids
Market agent

Prosumer,
DER
Aggregator DSO+TSO bids DSO local TSO
(market agent) Pre-qualification flexibility market AS market(s)
Prosumer,
DER
DSO resources TSO resources
selection selection

Activation/scheduling for local/global use TSO-DSO Agreements

DSO TSO
Measurement for verification (predefined schedules)

Figure 4. Local (DSO) and global (TSO) flexibility markets with shared responsibility (M3).
Figure 4. Local (DSO) and global (TSO) flexibility markets with shared responsibility (M3).
Coordination may sometimes include the communication from the DSO to the TSO of
• flexibility
the Common TSO-DSO
activated locallyflexibility market TSO imbalances. However, in many cases,
to avoid potential
locally
o activated flexibilities
This approach have a on
is based very low significant
a unique impact
flexibility on TSO
market, balancing.
where all the FPs can send
• theirTSO-DSO
Common bids to beflexibility
selected by TSO and DSO (Figure 5, model M4).
market
#o The
Thisselection
approachofis these
basedbids
on a by DSOflexibility
unique and TSOmarket,
is carried
whereout
allinthea FPs
coordinated
can
process, with many possible levels of complexity, and should
send their bids to be selected by TSO and DSO (Figure 5, model M4). take into account
# the
Theconstraints ofthese
selection of all thebids
grids
by involved.
DSO and TSO is carried out in a coordinated
o Ifprocess,
the resources
with many possible levels ofgrid
are used to resolve constraints,
complexity, the TSO
and should takeorinto
DSO need their
account
locational information.
the constraints of all the grids involved.
Energies 2021, 14, x FOR PEER REVIEW
# If the resources are used to resolve grid constraints, the TSO or DSO need 22 of 29
their
locational information.

bids
Market agent

Prosumer,
DER
Aggregator DSO+TSO bids DSO/TSO
Pre-qualification common
(market agent) flexibility market
Prosumer,
DER Coordinated DSO/TSO
selection

Activation/scheduling for local use

Measurement for verification DSO TSO

Activation/scheduling for global use

DSO validation
Measurement for verification

Figure5.5.Common
Figure CommonTSO-DSO
TSO-DSOflexibility
flexibilitymarket
market(M4).
(M4).

InIn[13,81],
[13,81],ananadditional
additionalTSO-DSO-BRP
TSO-DSO-BRPcoordination
coordinationmodelmodelisisidentified,
identified,where,
where,inin
the
thesame
sameflexibility
flexibilitymarket,
market,commercial
commercialand andregulated
regulatedflexibility
flexibilitytrades
tradestake
takeplace
place(model
(model
M5M5inin[13]).
[13]).However,
However,Table
Table7,7,which
whichidentifies
identifiesthe
theTSO-DSO
TSO-DSOcoordination
coordinationmechanisms
mechanisms
ofofthe
the projects initiativesanalyzed
projects and initiatives analyzedinin[13],
[13], shows
shows that
that thisthis mechanism
mechanism is very
is not not very
often
often selected.
selected. Indeed,
Indeed, system
system operators
operators prefer
prefer to acquire
to acquire flexibility
flexibility in in regulatedmarkets
regulated marketsto
toavoid
avoidcompeting
competingwithwithcommercial
commercial parties
parties that
that could lower
lower their
their priority
priorityaccess
accessand
and
compromise
compromise their systems operation. In addition, the discussion on flexibilitypriority
their systems operation. In addition, the discussion on flexibility priority
access
accessisisalso
alsoaahot
hottopic
topicamong
amongDSOs
DSOsandandTSOs,
TSOs,with
withDSOs
DSOsgenerally
generallypreferring
preferringmodels
models
M2 and M3, which give them priority to their local flexibility, and TSOs opting for model
M4, which give them better visibility and access to the distributed flexibility resources.

Table 7. Main coordination mechanisms addressed in the initiatives analyzed.

Energies 2021, 14, 4451 23 of 30

M2 and M3, which give them priority to their local flexibility, and TSOs opting for model
M4, which give them better visibility and access to the distributed flexibility resources.

Table 7. Main coordination mechanisms addressed in the initiatives analyzed.

TSO-DSO Coordination Mechanism
Centralized TSO flexibility market
Local (DSO) and global (TSO) flexibility
markets with resources sharing
Local (DSO) and global (TSO) flexibility
markets with shared responsibility
Common TSO-DSO flexibility market
Correspondence to EUniversal
Addressed in
Market Organization [13]
CoordiNet, FlexHub Eu-Sysflex, SmartNet,
M1
TDX-ASSIST
CoordiNet, De-Flex-Market, EcoGrid 2.0,
EMPOWER H2020, FLECH-iPower, Flex-DLM,
FlexHub Eu-Sysflex. FLEXICIENCY, FlexMart,
M2
GOPACS-IDCONS, InteGrid, Interflex, IREMEL,
NODES, Piclo Flex (and Piclo), SENSIBLE,
SmartNet, USEF
M3 CoordiNet, FlexHub Eu-Sysflex, SmartNet
M4 Coordinet, INTERRFACE, SmartNet

The review performed in [13] indicates that the TSO-DSO coordination with local
(DSO) and global (TSO) flexibility markets (models M2 and M3) were the most frequently
addressed among the project and initiatives listed in Table 2, as Table 7 shows. This is a
logical consequence of the fact that these markets organizations are apparently simpler,
with a lower optimization complexity, also allowing DSOs, the main facilitators of the use
of distributed flexibility, a better control and use of the resources located at their grids.
In addition, grid data are not shared between grid operators, something that can cause
privacy and security concerns. However, also note that this conclusion could sometimes
be misleading, since most initiatives, given their nature (commercial such as Piclo Flex,
Enera or GOPACS-IDCONS; conceptual such as FLECH-iPower or SENSIBLE; research
papers such as De-Flex-Market or EcoGrid 2.0) do not provide an extensive discussion
on coordination mechanisms and befell on the category of market mechanism associated
with that coordination scheme (market mechanisms M2 or M3). In fact, richer discussions
were found on projects that addressed different types of coordination mechanisms, namely
CoordiNet, FlexHub Eu-Sysflex, USEF and INTERRFACE. For example, INTERRFACE
focuses its discussion on the hypothesis of having or not separate or overlapping merit
order lists for CM and for the provision of balancing services. In any case, even if the
efficiency of common markets (mainly model M4) is widely recognized, data sharing issues
and co-optimization and coordination complexity are also widely acknowledge as potential
barriers, and since DSO flexibility markets are still a matter of research, smaller progressive
steps can support starting by simpler approaches, such as M2 and M3 models, which seems
to be coherent with what was observed in Table 7.
Note that the project SmartNet was not included on the list of projects reviewed
by EUniversal, since it can be considered the basic reference for the identification and
characterization of the main TSO-DSO coordination mechanisms and, as such, addresses
them all, being the base for all the following works. Reference [26] summarizes its main
findings: centralized schemes show higher technical and economic performance but are
very much dependent on generation and consumption forecasts’ quality and have larger
computational complexity; small-sized local markets can suffer from a high risk of illiquid-
ity; and information and communication technology (ICT) investments play a fundamental
role for any coordination scheme. Regarding this last topic, project TDX-Assist [84] focused
on developing ICT tools that are scalable, secure and interoperable for data exchange
between TSO and DSO, and can be taken as a fundamental reference on the ICT involved
in TSO-DSO coordination procedures. However, it does not analyze whether different ICT
requirements are needed, depending on the different market mechanisms described in this
Energies 2021, 14, 4451 24 of 30

section. The use cases related to the data exchange required for market operations, such
as acquiring balancing services at the distribution network by the TSO, were performed
under a centralized market scheme [85], basically corresponding to model M1. Other use
cases involving, for example, a congestion at the border between distribution and trans-
mission grids, are not considered to be solved by acquiring flexibility under any particular
market mechanism. Also related to communication interfaces, [86] proposes a conceptual
architecture based on three different interfaces. The first one is a direct TSO-DSO interface
to guarantee security, stability and resilience, with fast data exchanges for emergency
situations, and for medium- and long-term coordination for TSO-DSO grid connections by
exchanging structural information, forecasts, needs and resources activation. The second
one is a shared resources interface, where the distributed resources shared by TSO and DSO
can easily interact with both operators by providing structural information, baselines and
measurements. The third one includes the market interfaces, for the flexibility providers
to offer their services and TSO and DSO to buy them. These market interfaces would be
dependent on the specific market organizations selected, and should take care of avoiding
double bids selection, harmful activations for other SO grids, etc.
When looking at other projects outside the EU context, the Australian project Open
Energy Networks [87] is very interesting, since it also classifies TSO-DSO coordination
mechanisms (or the equivalent entities there) into the Single Integrated Platform Model
(SIP), Two-Step Tiered Platform Model (TSTP), Independent Distribution System Operator
Model (IDSO) and Hybrid Model. A closer look at this proposal shows strong similarities
with what is proposed here, although in these markets, as in the USA, and unlike in
the EU, energy, reserves and congestions are solved at once in the market optimization.
Taking this into account, the SIP model, where a single platform is managed by AEMO,
the Australian system and market operator, where aggregators can offer DER flexibilities,
can be considered similar to model M1. In the TSTP model, the DSO (called distribution
network service provider or DNSP) is responsible for managing and optimizing its network
and the resources located at its network, as in the M2 and M3 models, giving the priority
for using DER resources to the DSO before the TSO (or IDSO in this case) can use them. The
IDSO model is based on the TSTP, but an independent market operator manages the local
flexibility market, so they still can be matched to functional models M2 and M3. Finally,
the Hybrid model is based on a single platform that includes transmission, distribution
and DER constraints, which are optimized together, as in the M4 model. Once again, the
larger efficiency of this common optimization is highlighted.
Another Australian pilot project, completed in 2019, the Networks Renewed [88–90],
conducted by Australian Renewable Energy Agency (ARENA), Essential Energy (EE) and
United Energy (UE), also experimented with using aggregated distributed resources, in
grid services’ provision, to solve local LV voltage problems. In the assumed market model,
the DSO entity is responsible for managing the DER flexibility, using it for local voltage
services (reactive power management), and after that, the remaining flexibility is made
available for the global AS market (if needed by the TSO entity). Again, through the
clearance of the local market prior to the system-wide market, it can be assumed that this
model is close to M2 or M3 market models.
Focusing on the USA, current TSOs (or equivalent entities such as the independent
system operator or ISO) seem to focus on integrating DER for the provision of balancing
services. This is, for example, the case of the PJM Synchronized Reserve market [91,92],
the NYISO Wholesale market [93,94], the MISO’s Load Modifying Resource market [95]
and the AESO Load Shed Services for Imports [96], all in the USA and based on market
model M1. In 2011, the U.S. National Renewable Energy Laboratory proposed an Energy
Imbalance Market (EIM) for balancing and congestion management in several areas of the
Western Interconnection [97]. Two different possibilities were considered: (1) a centralized
inter-area balancing market in which DER can participate (model M1); and (2) local and
global flexibility markets for congestion management, in which the DSO secures its own
flexibility needs, while also allowing the DER, within its control area, to offer flexibility to
Energies 2021, 14, 4451 25 of 30

other areas (other TSO or DSO), provided that the bids are cleared by a security-constrained
economic dispatch (model M3). As of January 2021, a total of 11 TSOs and DSOs integrated
the EIM [98], with four other members being expected to join by the end of the year.

6. Conclusions
This paper presents a practical review of the existing and potential new ASs for TSOs
and new local system services for DSOs, with an emphasis on DSO services that will help
to address the new operation paradigm of the distribution grids. It also summarizes the
main TSO-DSO coordination mechanisms and flexibility markets organizations proposed
in the literature to acquire this flexibility. The work in EUniversal project, including the
analysis of 24 research projects and initiatives dealing with DSO flexibility markets, is the
base for the identification of DSO services, the assessment of their relative relevance for the
DSO operation, and the identification of the main TSO-DSO coordination mechanisms for
flexibility acquisition.
Enabling the participation of most potential players in the system services, with a
special focus on DER, is essential to provide flexibility for the system operation at all
levels: at the transmission level to account for new flexibility resources in a scenario where
thermal power plants, traditional FPs, are being progressively decommissioned, and, at the
distribution level, to cope with the increasing complexity of the distribution grids operation,
both to keep the security and quality of supply in a cost-effective way and to transport the
DG surplus from the decentralized generation to the transmission grid. The analysis of
this evolving transformation allows to identify new needs, scarcities and responsibility
in the operation of the transmission and distribution grids, as the basis to identify and
assess future grid services for a better and cost-effective grid operation, especially in the
DSO domain, where the precise definition and deployment of these new grid services is
still starting.
On the TSO side, grid services are very well established, and it is the move from
centralized to DG, with the decrease of dispatchable resources, that raises the existence
of new scarcities, and the need of compensating them with new flexibility resources
from the distribution side. The lower controllability of the new resources leads to the
challenge of guaranteeing the firmness and adequacy of the system. The shifting to
renewable generation and a more volatile net demand may require new fast reserves and
ramping services, new flexibility resources, and the decrease of physical inertia due to the
decommissioning of synchronous generators may require new inertia markets and the
participation of virtual inertia providers.
On the DSO side, grid services are still being discussed, but there seems to be a clear
consensus on the fact that VC and CM will need to be addressed first. The development of
these grid services to profit from the existing distributed flexibility also requires a careful
assessment of the most cost-effective solutions compared to more conventional practices,
such as the traditional approach of fit-and-forget approach based on grid reinforcements.
Indeed, the complexity and costs of developing potential new services is sometimes a
concern that needs to be properly assessed, and which will certainly depend on each grid’s
characteristics and expected evolution for the coming years. Technological advancements
also have an important role in increasing the controllability of DER and unlocking their
potential flexibility. The increasing role of the distribution systems in supporting extreme
events and outages, to increase the overall system resiliency, also provides new responsibil-
ities to DSOs. Although services such as islanding or black-start capabilities are not yet
seen as essential, they are expected to gain relevance in the coming years.
TSO-DSO coordination mechanisms are also under constant debate, and both the
complexity and the interests of TSOs and DSOs may sometimes make this coordination
difficult. Indeed, the most efficient approaches are those where all flexibility resources
are shared and optimally selected considering some kind of social welfare that simul-
taneously takes into account TSO and DSO grid constraints and needs. However, this
may require grid data sharing and the establishment of complex selection criteria and
Energies 2021, 14, 4451 26 of 30

priorities that may not properly satisfy all parties. In addition, moving from the current
system, where no distributed flexibility has largely been used yet, to this unique TSO-DSO
market framework may involve computational and organizational complexities that may
be better addressed with previous intermediate steps. This may explain why separated but
coordinated TSO and DSO flexibility markets are apparently preferred, as they could be a
reasonable approach to first unlock the distributed flexibility and develop the new DSO
market-based system services, as a previous step towards a more integrated and efficient
TSO-DSO coordination.

Author Contributions: Conceptualization, R.S., E.A., R.F., J.V. and C.G.; methodology, R.S., E.A., R.F.,
J.V. and C.G.; formal analysis, R.S., E.A., R.F., J.V. and C.G.; investigation, R.S., E.A., R.F., J.V. and C.G.;
resources, R.S., E.A., R.F., J.V. and C.G.; data curation, R.S., E.A., R.F., J.V. and C.G.; writing—original
draft preparation, R.S., E.A., R.F., J.V. and C.G.; writing—review and editing, R.S., E.A., R.F., J.V. and
C.G.; supervision, J.V. and C.G.; project administration, C.G.; funding acquisition, C.G. All authors
have read and agreed to the published version of the manuscript.
Funding: The research leading to these results has received funding from the European Union’s
Horizon 2020—The EU Framework Programme for Research and Innovation 2014–2020, under grant
agreement No. 864334, EUniversal project. The sole responsibility for the content lies with the
authors. It does not necessarily reflect the opinion of the Innovation and Networks Executive Agency
(INEA) or the European Commission (EC). INEA or the EC are not responsible for any use that may
be made of the information it contains.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: No new data were created or analyzed in this study. Data sharing is
not applicable to this article.
Acknowledgments: The authors would like to express their gratitude to the EUniversal DSO partners
(E-REDES former EDPD from Portugal, E.ON. from Germany and Energa from Poland) and to
E.DSO (European Distribution System Operators association), as well as to other EU-SysFlex and
Interconnect partners that have, to some extent, help us to elaborate this integral vision on TSO and
DSO system services.
Conflicts of Interest: The authors declare no conflict of interest.

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